How much money are you setting aside into your savings account? If you are not saving money, you could be leaving yourself vulnerable in the event of a large financial problem such as a job loss or medical expenses. Saving at least 10% of each paycheck is a great start to help you start focusing on saving money and building a large emergency cash reserve. Most banks will offer a free savings account when you open a checking account with them but the interest rate on the savings may be very low. This is why it is a wise idea to consider saving money with a high-yield savings account or a money market account where you will earn a higher interest rate and still appreciate most of the flexibility you have with a traditional savings account.
Know Your Income
To start saving money you need to look at your income and to determine how much money you can reasonably set aside to your savings account. Even if you have a lot of debt to take care of, setting aside even $25 a paycheck will help you to have something to fall back on the event of an emergency. You need to start going through all of your spending to see where the money is going and to find the “leaks”. As you see where you are spending too much money and literally wasting it, you will have a much easier time setting aside an extra $5 or more to your savings account.
For most people jumping from having an extra $200 in spending cash to only $50 can be a big adjustment. You need to start small and invest what you can afford to in your savings account. As you get comfortable setting aside $25 a paycheck or more, you can start increasing this amount until you are able to put aside 10% or more of your paycheck amount on a regular basis.
When you head to the store, take cash instead of a debit card. This will help you to stick to your shopping list so you only spend the amount of money that you have with you. The other plus side to this is that you will get some spare change to throw into your change jar. As the spare change jar starts to build up more and more, you can take this to the bank and hopefully see $50 or more in savings.
A great way to start saving is to save before you see the money. Talk to your employer to find out if they can transfer your money into two separate accounts. This way you can have a portion of your paycheck go right into your savings account and the rest will go to your checking. It prevents you from seeing the money in the first place and having the temptation to spend it. Move it to an “outside” account like ING instead of with your local bank so you don’t see the money as often. If you don’t see it and rarely check on your online savings account, you will be surprised to see how quickly the money can add up.
Finding the highest interest rates also helps to boost your savings. Compare the highest savings rates on RateCatcher.com